Equity benchmarks extended losses in morning trade with the Sensex falling more than 100 points, weighed by FMCG, banking & financials, auto and pharma stocks. However, oil and select technology stocks bucked the trend.
Adrian Mowat of JP Morgan says Indian nominal GDP growth is recovering. This is driving domestic cyclical profits.
"Our strategy has been overweight domestic cyclicals and underweight defensives and exporters. The result is a neutral position," he says.
He feels the reform agenda is breaking new ground with an audacious attack on 'black money' by withdrawing high denomination banks notes. There is short-term pain with the lack of cash hitting consumption. Hopefully at the end, the formal economy and tax revenues will increase.
Mowat says the implementation of GST is another source of near term economic risk with significant long-term benefits. "We are buyers into the weakness," he adds.
